Yes on the red wire. I don't know of a 4 hole receptacle but that doesn't mean it doesn't exist. Do you also plan to change your breaker? You'll need to disconnect the red wire and cap it.
Here's a link to some instructions on how to do your project. Good luck!
http://en.allexperts.com/q/Electrical-Wiring-Home-1734/Change-existing-220V-dryer.htm
They do not make a four hole recepticle for 120. Each recep. is made for different ampre ratings and different volt ratings. For example a 30 A 250v plug is different from a 30a 125/250v plug which is different from a 30a 125v plug, just cause I say 125/250 does not mean it is used for both 125 and 250v, it means the unit plugged into it uses 125 and 250v at the same time. For instance a dryer uses 250v for the heating element and 125v for the control curcuitry, timers, etc.
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